Atlanta’s long overlooked south side is finally proving its potential as the next frontier for the region’s economic development.

Atlanta Business Chronicle reported June 9 on its website that The Kroger Co. will help kick off a combined 2 million-square-foot distribution and warehouse project in Forest Park. It’s part of an even larger planned redevelopment of Fort Gillem into a regional logistics campus.

The 1,500-acre former U.S. Army base is “one of those catalytic sites that can transform the region,” said Dan Reuter, community development manager with the Atlanta Regional Commission.

Cincinnati-based Kroger (NYSE: KR), the nation’s largest supermarket chain, is the first spark for that transformation. It plans to occupy a new 1 million-square-foot building at Fort Gillem, according to sources familiar with the plan.

ES3 LLC, a logistics company that has facilities in several states, including Fairburn, Ga., will occupy another new building, probably greater than 700,000 square feet, sources said. In Pennsylvania, ES3 already operates the largest automated food warehouse in the world.

The 2 million square feet of new distribution and warehouse space at Fort Gillem will be one of the largest industrial projects in metro Atlanta in recent years.

It marks the first phase of a massive, long-term redevelopment of the Army base.

It also underscores broader ambitions to spur economic development around Hartsfield-Jackson Atlanta International Airport.

That effort is being led by the Atlanta Aerotropolis Alliance.

“Atlanta has to think big,” said K.C. Conway, chief economist with real estate firm Colliers International. “Fort Gillem would be an important piece of the Aerotropolis.”

The Forest Park/Fort Gillem Implementation Local Redevelopment Authority will shepherd the transformation of the old Army base.

Atlanta’s Weeks Robinson Properties is part of the team serving as master developer.

For much of this year, Fort Gillem has been talked about in real estate circles as a destination for Kroger. ES3 has managed to stay a bit more under the radar. Together, the companies will take about 320 acres there.

Last year, Kroger was considering a campus-like project, and it scouted several metro Atlanta properties on which it might develop.

A 300-acre site at Fulton County Airport — Brown Field, just west of Atlanta, emerged as a contender. That deal eventually fell through, but California developer Majestic Realty Co. plans to inject $150 million into a new industrial project at the airport. Majestic and Fulton County — owner of the airport — cemented the agreement in March.

The redevelopment of the Fulton County Airport and Fort Gillem share something in common. And, Majestic Realty executives have said the region is at a tipping point. After years of worsening traffic congestion across metro Atlanta and higher transportation costs, more companies are putting their distribution and warehouse operations farther south, closer to Hartsfield-Jackson.

The airport has also evolved over the years to put a greater emphasis on air cargo, a business that is primed for growth in the south side.

Another factor driving broader industrial activity across the Southeast is the growth of the East Coast ports, including the Port of Savannah.

For all those reasons, Fort Gillem has the potential to develop into a regional intermodal for freight transport, Conway said.

“This is the whole remake of the supply chain,” he said. “We cannot underestimate the need for intermodal capacity in this region.”

Metro Atlanta is already posting some of the strongest industrial leasing activity in the nation.

It led all U.S. metro regions in net absorption in the first quarter.

Areas around Hartsfield-Jackson saw some of the greatest absorption — almost 3 million square feet — and vacancy dropped to about 11 percent, said CBRE Inc.’s Dan Wagner.

A healthy vacancy rate for Atlanta would be about 14 percent. That should spark confidence for more development.